did you try and rerun the XF86Config-4 ? there might be an option to NOT to use virtual desktop?
After a quick look at your config file, I noticed that it is not being told the Vid RAM amount in there. Check your logs to see if X is detecting that on the fly, or that may be whats dropping you into a VS mode for higher resolutions (and on the fly changes)
That happened to me back in the day when my TNT was the pimp shit. It wasnt autodetecting my stuff, and manual edits were necessary. I didnt specify the 8MB VRAM and IIRC it was thinking it was a 1MB card (maybe 2MB, dont remember). Check and see, its worth a shot :)